Pulse News

**Investors Should Buy the Dip, Ride the Lyft**

Lyft still lags Uber, but its shares are much cheaper and its business is looking up.

By Anita Ramaswamy

Mar 6, 2025, 7:30am PST

Investors have declared Uber the winner in its bitter ride-hailing battle with Lyft. It's true that Uber dominates the industry, but Lyft might be the better investment right now.

Uber's success is no secret. Its customers spent a total of $163 billion on the platform in 2024, roughly 10 times the value of transactions on Lyft over the same period. Uber's market cap is more than 30 times bigger than its rival's, and in some ways, it looks better positioned to address the threat posed by robotaxis.

**The Takeaway**

- Business is looking up for Lyft, but its stock still looks weak

- Growth is accelerating and Lyft is generating cash, potentially attracting investor interest

- Lyft is generating lots of cash and buying back more stock

That success made Lyft an also-ran in the eyes of investors. The stock has barely budged in nearly three years, and the for-sale sign the company put up nearly two years ago hasn't led to a deal.

The two companies were not that different in terms of their valuation multiple on expected revenue, at least until last year. Throughout 2023, Uber and Lyft each traded at an average multiple of roughly twice next year's sales, according to data from S&P Global Market Intelligence. Today, Uber trades at 3 times, while Lyft is valued at 0.7 times. Uber is also in the lead on profit metrics like the ratio of enterprise value to forward earnings before interest, taxes, depreciation, and amortization, with Lyft trading at half of Uber's 18 times multiple.

The market is making the two companies' differences clear. So far this year, Uber is up 19% and Lyft is down 9%. But investors are missing some good news at Lyft.

Lyft grew its top line 31% last year, much more than Uber did. On a multiple of next year's EBITDA, its shares are cheaper than at any other time in its history as a public company.

There are a few different reasons why Lyft is down. Those white Waymos cruising around San Francisco and Phoenix with no one in the driver's seat pose a big risk to the ride-hailing industry. Robotaxis are "the biggest debate on Uber and Lyft that won't be settled for the next two to three years," said Wolfe Research analyst Shweta Khajuria.

Uber and Lyft have both moved to partner with robotaxi companies, but Uber is in the lead right now. This week, it started to pair some of its riders with Waymo's robotaxis in Austin, and it plans to do the same in Atlanta later this year.

Lyft so far has fared worse. Two of its earlier partners, Argo AI and Motional, struggled. But Lyft announced three fresh partnerships in November, including one with startup May Mobility to bring robotaxis to Lyft riders in Atlanta this year.

The short-term data on the impact of robotaxis have been mixed. Both Uber and Lyft said in February their drivers completed a record-high number of ride-hailing trips in the fourth quarter of 2024. That good news was offset by comments from Waymo owner Alphabet, which said its robotaxis completed a total of more than 200,000 rides each week in three major U.S. cities, Los Angeles, Phoenix, and San Francisco. Data from a research firm said both Uber and Lyft were losing market share in the parts of San Francisco where Waymo operates, with Lyft suffering more.

But Lyft CEO David Risher has since disputed those vehicle data and said the company's market share at the end of January "was the highest it's been since 2022."

Daniel Kurnos, an analyst at Benchmark Co., argued in a January report that Lyft's 2020 acquisition of Flexdrive, a fleet management company that rents vehicles to Lyft drivers, would help it succeed with robotaxis. Flexdrive puts Lyft in a strong position to manage fleets of autonomous vehicles. Uber works with and has invested in separate companies that manage and maintain some fleets of cars on its behalf, but it doesn't offer that capability in-house.

Lyft's new boss is another factor the market might be underestimating. Risher took the helm in April 2023 from co-founder Logan Green. Under Risher, Lyft has expanded ridership of its high-end black cars and pushed into new markets in Canada.

Risher has also focused on forging partnerships with other companies, such as hotels and airlines, to offer discounts and perks. Lyft executives have said these riders tend to use the service more frequently. The battle for partners is tough, though; Lyft recently lost its partnership with Delta to Uber.

Lyft credited its recent partnership with DoorDash as a key growth catalyst in the fourth quarter. Uber Eats has been a big driver for Uber.

Lyft's turnaround is showing up in the numbers. The company's top line grew 31% last year compared with 8% in 2023. Nearly 25 million riders used Lyft at least once in the fourth quarter of 2024, the company said. That's a record high for the company, surpassing Lyft's pre-pandemic quarterly active ridership of 23 million in 2019.

Lyft aims to grow gross bookings, or the value of all transactions on its platform, by 15% annually until 2027. In 2024, that metric grew 17%. Uber outlined a similar target last February.

Lyft has grown while generating an increasing amount of cash. Last year that number was $766 million. Analysts expect it to shrink next year to $607 million, but that expectation makes little sense given Lyft management's guidance that at least 90% of the company's adjusted EBITDA would convert to free cash flow. Last year, Lyft converted 100% of its $382 million of adjusted EBITDA into free cash flow.

"I think the Street is either ignoring [Lyft management] or don't believe them," said Kurnos, who is forecasting that Lyft will generate $796 million in free cash flow this year.

In February, Lyft executives said they would use some of that cash for a new share buyback program of up to $500 million. The buybacks will reduce the dilutive impact of the generous stock-based compensation Lyft grants its employees, a sore spot with investors.

Another reason for Lyft's stock downturn: Two early backers, Fidelity and Rakuten Group, together sold off roughly 10% of the company's shares in recent months, noted Andrew Stein, the head of research at hedge fund Lekker Capital, which is buying Lyft's stock.

Lyft's recent stock sell-off and newfound profitability might finally bring in a buyer. Amazon could buy Lyft to boost its autonomous vehicle business, Zoox. There's also Lyft partner DoorDash and Asian ride-hailing and delivery firm Grab.

As Stein put it, "While both Uber and Lyft look attractive, there's much more risk-adjusted upside for Lyft."

Correction: Andrew Stein is the head of research at hedge fund Lekker Capital. An earlier version of this article misstated his title.

Anita Ramaswamy is a financial analysis writer at The Information. She can be reached at anita.ramaswamy@theinformation.com or on Signal at +1 480-463-4056. Follow her on X at @anitaramaswamy.